* Coronavirus cases rise, Asian, European stocks slip
* World stocks still set for best week since June
* Major currencies steady, oil turns weak again
* U.S. Payrolls might be tricky to decipher this month
* World FX rates in 2020 tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Feb 7 (Reuters) - Nagging coronavirus worries took a swipe at world markets on Friday but failed to stand in the way of the best week for stocks since June and the strongest for the dollar since August.
European trading pushed stocks down and safe-haven government bonds up, a pattern set in Asia that traders seemed happy to extend before monthly U.S. jobs data.
Investors wavered over the impact of the coronavirus. The rate of new infections has slowed, although the extent of the economic disruption due to curbs on travel and trade are not completely clear.
But the week till now has been one long rebound that lifted MSCI’s main world stocks index 3%, heading back to the record highs reached at the start of the year.
Thanks to a $400 billion wipeout on Monday, Shanghai is poised for its worst week in eight months. But other Asian indexes are ahead and the pan-European FTSEurofirst is heading for its best week since late 2016.
“We are not that nervous, actually we are increasing our risk allocation,” said SEB investment management’s global head of asset allocation, Hans Peterson, adding that the risk of a massive worldwide epidemic seemed to have dropped.
“We look more at this moment at the macro data in the U.S. which is really very good ... and we presume we will get substantial support from central banks like we did in China on Monday.”
Traders also had other areas to focus on. The euro fell to its lowest since October in early European trading after German industrial output recorded its biggest decline in a decade and strong U.S. employment numbers had primed the dollar ahead U.S. payrolls data.
In Asian trade, the yen halted a slide that has it set for its worst week in 18 months, leaving the currency sitting just above a two-week low at 109.89 per dollar.
The Australian dollar, often seen as a proxy for China, weakened 0.5% to $0.6699 after the Reserve Bank of Australia slashed growth forecasts in its quarterly economic outlook, blaming its bushfires and the coronavirus.
The Aussie was on track for its first weekly gain this year, whereas the Singapore dollar and Thai baht have been trampled in a rush out of from emerging market.
Much is unknown about the coronavirus. The World Health Organization has said it is too early to call a peak in the outbreak. The death toll has doubled in less than a week to 638, 636 in China and two elsewhere.
China’s aggressive response, dubbed a “people’s war for epidemic prevention” by President Xi Jinping, has seen Beijing pump billions of dollars into the money market to try and stabilise confidence.
Yet, owing to much greater exposure to Chinese demand and less access to the benefits of monetary stimulus, commodity prices have been more sensitive to conditions on the ground.
Oil and metal prices fell hard when the coronavirus outbreak gained pace and have been slow to recover.
Brent crude was weak again on Friday at $54.43 per barrel, heading for its fifth back-to-back weekly drop. Oil prices have fallen by 16% this year.
A rally in copper, often seen as a barometer of global economic health because of its wide industrial use, had at $5,695 per tonne, although it has seen its strongest week since the start of December.
“We think that demand could come back strongly as opposed to gradually in Q2 2020,” said Commonwealth Bank commodities analyst Vivek Dhar. “But the risk in the near term is that (Chinese) provinces take longer to return to work in order to contain the spread of the virus.”
Additional reporting by Tom Westbrook in Singapore; Editing by Toby Chopra and Edmund Blair